Whining

by hilzoy

Phil Gramm, McCain's "Econ Brain" said this in an interview published yesterday:

""You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said. (...)

"Misery sells newspapers," Mr. Gramm said. "Thank God the economy is not as bad as you read in the newspaper every day.""

Really? The stock market is officially in bear territory; gas is over $4 a gallon; foreclosures rose 53% in June and are "the highest since the Great Depression of the 1930s"; "$3.5 trillion in homeowner equity has been wiped out since the spring of 2006", while the banking sector is looking at around a trillion in losses; we're shedding jobs; the dollar is falling, which contributes not just to rising oil prices but to inflation more generally; growth is anemic at best, and possibly negative since February; and, in the latest twist, Fannie Mae and Freddie Mac are tanking, and some fairly serious people are using words like "insolvent." Nouriel Roubini cheerfully sums it up:

"So brace yourself for a severe recession in the US and other advanced economies, a serious global growth slowdown and a systemic financial crisis. The worst is ahead of us rather than behind us and the financial and equity markets complacency and sucker’s rally that – in April and May - followed the Bears Stearns creditors rescue and the Fed bailout of non-bank broker dealers (the PDCF lender of last resort support extended to primary dealers) was gone by June with stock markets now back to bearish 20% plus downward adjustment. (...)

So the worst is ahead of us for the real economy and financial markets. (...) Persistent headwinds hitting consumers on a more protracted basis are: falling home prices, falling home equity withdrawal, falling stock prices, rising oil and food prices, rising debt servicing ratios, falling consumer confidence, falling employment and income generation."

I'm so glad this is all in my head!

At around one this afternoon, the McCain campaign said this: ""Phil Gramm’s comments are not representative of John McCain’s views," said a McCain official." A couple of hours later, McCain spoke out more strongly:

"John McCain strongly disavowed the comments today of his campaign co-chair and economic adviser, saying Phil Gramm "does not speak for me -- I speak for me."

"So, I strongly disagree," McCain told reporters gathered for a press conference that was added to his schedule following a town hall meeting near Detroit at least in part to deal with Gramm's comments that the economy was not in as poor shape as is portrayed. (...)

"I believe that the person here in Michigan who just lost his job isn't suffering from a 'mental recession,' McCain said, citing Gramm's remarks published in the Washington Times. "I believe that the mother here in Michigan, around the country trying to get enough money to educate her children isn’t 'whining.'"

America, McCain made sure to note, "is in great difficulty.""

Gramm is one of McCain's most important economic advisors. There are already more than enough reasons why he's unsuited for that job, ranging from his role in the Enron, S&L, and subprime crises to his employment by, and lobbying for, a company presently under criminal investigation. What he said today pales in comparison to other things he's done. If we're very, very lucky, he might have just taken himself out of contention for Treasury Secretary. But he should never have been there to begin with.

[UPDATE: Steve Benen notes that the McCain campaign's initial response was to stand by Gramm's remarks, and that McCain himself has suggested on several occasons that a lot of our economic problems are psychological. END UPDATE]

***

While Gramm's involvement in economic meltdowns and his history of supporting corporations like Enron at the expense of the rest of us are the main reasons he should be kept far away from economic policy, I can't resist adding a few of his choicer displays of empathy and compassion. From Molly Ivins reminds us of:

"The rib-tickling time Gramm wanted to deny food stamps to elderly legal immigrants on the splendid grounds that extending aid would only foster dependency, thereby incicting "a new personal tragedy on the most vulnerable among us."

And:

"During the fight over health care reform, Gramm said, "We have to blow up this train and the rails and the trestle and kill everyone on board." When an elderly widow in Corsicana told him that cutting Medicare would make it more difficult for her to remain independent, Gramm said, "You haven't thought about a new husband, have you?""

He wasn't without insight into his own failings, though. He told this joke about himself:

"People say I don't have a heart. I do. I keep it in a quart jar on my desk."

Comments

[Ugh]

The stock market is officially in bear territory; gas is over $4 a gallon; foreclosures rose 53% in June and are "the highest since the Great Depression of the 1930s"; "$3.5 trillion in homeowner equity has been wiped out since the spring of 2006", while the banking sector is looking at around a trillion in losses; we're shedding jobs; the dollar is falling, which contributes not just to rising oil prices but to inflation more generally; growth is anemic at best, and possibly negative since February; and, in the latest twist, Fannie Mae and Freddie Mac are tanking, and some fairly serious people are using words like "insolvent."

All this is just more whining. I mean, come one, who here hasn't lost a couple of trillion dollars lately, huh? And of course shedding jobs is a right of spring, and makes your fur healthier and fuller. Negative growth isn't necessarily a bad thing. In tumors, for example. Further, who doesn't want to be insolvent these days, gosh, even Ed McMahon is doing it.

[Equal Opportunity Cynic]

Gramm's failings aside, I'm really astonished that the McCain campaign would gift-wrap the narrative of "McCain out of touch with ordinary Americans' economic troubles." It's really astonishing.

In a way this is the mirror image of the ridiculous hoo-hah over Obama's remarks that people in PA were bitter. That whole episode never gained any traction to hurt Obama, despite his clumsy phrasing, because the central message had such resonance. People are upset about the economy!

Here we have the same elitist paternalism that Obama was accused of, married to the opposite economic message. In a way it's as though Gramm pulled the mask off the big-business wing of the GOP and showed what contempt they have for their base!

If this gets at all into the media narrative, the McCain campaign is in some real trouble. I know, I know, just wishful thinking....

[Hogan]

Stock market and home prices in the tank? Buying opportunities! Jobs disappearing? People are now free to start their own businesses! Dollar is weak? That's great for exports! (Or it would be if we still had the manufacturing capacity to produce anything people in other countries want, like fuel-efficient cars.) In Phil Gramm's America, everybody is a winner! Except for the losers, and who cares about them?

[cleek]

i hope Obama goes after this like a Jack Russel after a squirrel.

[KCinDC]

Cleek, looks like he is.

[Equal Opportunity Cynic]

Following on my comments above, here are the top 4 items under "Latest News" at CNN.com:

# McCain adviser explains 'nation of whiners'
# Rove ignores subpoena, refuses to testify
# Obama talks about glass ceilings, child care
# CNNMoney: Oil zooms up $5-plus on Iran fears

Now, granted, their main main story is something about the freed hostages from Colombia, and I have no idea how closely this tracks with the TV news because I don't watch TV for news. But if "nation of whiners" can make it into the public consciousness associated with McCain then this is a huge huge win for Obama.

[cleek]

Cleek, looks like he is.

good start.

now he needs to get his whole team screaming about this on every news show, to every reporter, from the top of every mountain, non-stop, for a week, regardless of the subject. tie it to the GOP in general. tie it to Bush's tax cuts. tie it to McCain's admitted lack of economic chops. tie it to everything they can get a rope around. then pull it all together and ask America if this is the kind of people we want running our country, again.

[Bernard Yomtov]

i hope Obama goes after this like a Jack Russel after a squirrel.

He's on it like white on rice.

[mightygodking]

He's on it like glitter on Liberace.

[cleek]

oh, and how could i forget...

tie it to McCain's view that SS is, at its heart, a "disgrace".

what more does anyone need to know about him besides the facts that he thinks one of the greatest and most popular programs the US government has ever run is a disgrace , and that he chose a person who thinks the current economic troubles are imaginary to co-chair his campaign ?

McCain is pure, distilled GOP incompetence; he's ten pounds of Bush in a five pound sack.

[cleek]

oh man... and let's not forget McCain's problems with birth control.

it's a shame it's only July. these are the kinds of things that should allow Obama to crush McCain like a Schmidt's can. but four months is a long time... he could re-inflate.

[AndrewBW]

I just wish I could say Phil Gramm was a figment of my imagination ...

[Brick Oven Bill]

Democracies simply cannot exist for an extended period of time because the electorate eventually learns to vote itself access to the Treasury. It’s been a two hundred-year decline that began with eliminating tax requirements for voter eligibility in the early 1800s. Then came the Civil War Amendments, 1920, and the 1960s.

The reality is that our economic predicament reflects the fact that the broad electorate got what we asked for-minimum wages, environmental roadblocks to business, and relatively comfy retirements for the current round of retirees.

The other reality is that dictatorships (China, Oil Producers, etc.) do not grant these goodies to their populations and operate more efficiently than we do. These dictatorships now have the ability to tip over our little apple cart at a time of their choosing. When this happens, your first indication will likely be that your ATM card no longer works. Phil Gramm is a dummy.

American families should be concentrating on food security, financial security, and physical security. One year of food is recommended. The Mormon Church provides solid guidance that we can all benefit from. Google ‘non-borrowed bank reserves’.

[Gary Farber]

He told this joke about himself:

"People say I don't have a heart. I do. I keep it in a quart jar on my desk."

I've posted here before that this is extremely famously (in sf/horror/fantasy/writing circles) Robert Bloch's most famous line that he was well-known by since the 1940s.

[Gary Farber]

Democracies simply cannot exist for an extended period of time because the electorate eventually learns to vote itself access to the Treasury. It’s been a two hundred-year decline [....]

Res ipsa loquitur.

"The other reality is that dictatorships (China, Oil Producers, etc.) [...] operate more efficiently than we do."

Cite?

[rea]

BOB comes out against universal sufferage--the world belongs to the wealthy, who allow us to live in it on sufferance, I guess.

[Slartibartfast]

Cite?

Oh, I completely missed that. Understandable, given that I've taken to scrolling right by Bill's periodic deposition of unsubstantiated assertion, but still...once pointed out, I could only marvel at the notion that PRC was efficient in any way. Great Leap Forward was, after all, exactly how you'd fashion an Industrial Revolution, if you wanted to push your country through that phase as rapidly as possible.

And, in the process, kill off a few dozen million excess population. Never mind that you'd encouraged that surplus, and more. Between the Great Leap Forward and the Cultural Revolution, China managed to savage itself rather well, starve off tens of millions of people, and in the process nearly destroy its own academic institutions.

Efficiently, though.

[Jesurgislac]

Apparently the average Iraqis standard of living went up after Saddam Hussein nationalized the oil industry. (Notably among oil producing nations, until the Gulf War Iraq was investing much of its oil revenue in education and infrastructure: the idea was, apparently, within a generation to end the dependence on outside experts being brought in.)

Exxon Mobil, Shell, Total and BP were mightily annoyed at the time, but 36 years later, Iraqi standard of living is in the pits, and those four companies were scheduled to get their oil concessions back on 30th June. No bidding required, of course: those nasty mean Iraqis shouldn't have thought it was their oil just because it was under their sand.

None of this should be taken as support for Saddam Hussein's tyranny in Iraq... but.

[russell]

It’s been a two hundred-year decline that began with eliminating tax requirements for voter eligibility in the early 1800s.

Personally, I think it's been all downhill since the neolithic.

Before that, happy small bands of hunter gatherers. If you lived past childhood, you could probably look forward to a fairly long and reasonably healthy life.

Beginning with the neolithic is when we get into agriculture, city-states, specialization of labor, and all of the accompanying political BS.

Back to the stone age (*early* stone age, natch) sez I.

Thanks -

[cleek]

Back to the stone age (*early* stone age, natch) sez I.

i'm ok with the hunting, but the gathering? you'll have to find someone else for that. all the bending and the reaching - it's hell for my sciatica!

[Jesurgislac]

Back to the stone age?

But... but... do you have any idea how long it took to blog something when everything had to be laboriously chipped out by hand? Why, I remember I tried to blog the invention of agriculture, and by the time I finished chipping out the last hand-carved sentence, my tribe had already discovered wheat!

[Ugh]

Oil is at almost $147 dollars per barrel.

And this:

David Wurmser, former Middle East advisor to Vice President Dick Cheney, who left the White House job late last summer ... put the odds of Israel striking Iran before Bush leaves office at "slightly, slightly above fifty/fifty.""

Do I hear $250 per barrel, Monty?

Maybe I should stop driving my SUV.

[Ugh]

And this is scary (and insane if true):

Israel Air Force (IAF) war planes are practicing in Iraqi airspace and land in US airbases on the country as preparation for a potential strike on Iran, sources in the Iraqi Defense Ministry told a local news network, Friday.

[Ugh]

Our glorious march to Victory™ in Iraq continues. Some of the school painting along the way:

In one interview played at the hearing for Sgt. Ryan Weemer, Sgt. Jermaine Nelson told an agent from the Naval Criminal Investigative Service that he and Weemer were ordered by their sergeant to kill the prisoners as the Marines swept through a Fallouja neighborhood on Nov. 9, 2004.
...
Nelson said that he watched in shock as Nazario shot a kneeling prisoner at point-blank range: "He hit the dude in the forehead, the dude went down and there was blood . . . all over [Nazario's] boots."

Weemer then used his service pistol to shoot one of the prisoners, Nelson said. "He shot him and the dude was on the ground and rolling, and [Weemer] was shooting, shooting, shooting, shooting, shooting."

Nelson also said in the interview that he saw the faces of the dead prisoners in his dreams.

Fnck Saddam, we're taking him out!

[Susan Kitchens]

When your wife is a beer distributor heiress, she provides you with enough financial cushion so that you can judge all those financial events (stockmarket, unemployment, gas price, dollar strength, etc.) in the proper light -- psychological.

And you know what people do when they're under pressure and feeling down, right? They drink. Beer.

Yep. It's totally psychological.

[cleek]

Some of the school painting along the way

pish posh. you can't make a hearts and minds omelette without cracking a few skulls and chest cavities in the process!

[Ugh]

We're painting schools in Afghanistan too:

JALALABAD, Afghanistan (Reuters) - A U.S. coalition force air strike on Sunday killed 47 civilians, including 39 women and children, in the eastern province of Nangarhar, an Afghan official said on Friday.*

Oh look, a pretty new iPhone.

*I note that the U.S. denies this.

[Wysage]

One of the "surprising facts" is that food prices and gasoline are not included in calculating the rate of inflation. Whether this is good or bad is beyond my expertise. The GDP is adjusted for inflation, so the increase in prices for food and gasoline are not discounted in the GDP but actually increases it. What percentage of growth in GDP is actually the increased prices for food and gasoline? I don't know, but it is possible this is one reason that growth in the GDP has been slightly positive for the past year, and we have not been technically in a recession. Think about it, our pain at the check-out line or gas pump may be why the US is not in a recession.

[ken]

The US economy is in crisis. It is need of life support, stabilization and rehabilitation.

Thinking of the crisis we face I am growing even more convinced that Barack Obama is not up to the task facing the next president. He can give a good speech and draw crowds but his background demonstrates that he is in this only for himself and is woefully unqualified to handle the job of fixing the economy.

I have no confidence in Obama. He is a nice guy, he's a minority, and well educated. But the presidency is not be the kind of place where an affirmative action candidate makes rational sense.

It is not a meaningless university professorship. It is not a public relations position at a non profit hospital, etc. It is a critical position whose occupant can, if capable, propose and enect legislation that can shore up our weakening economy.

There is nothing in Obamas background that qualifies him to the task at hand. Other than being able to give a good speech, take credit for others work, and avoid personal accountability he has no experience at dealing with serious issues successfully.

I am afraid my fellow liberals never realized this in there mindless adulation of Obama that has led to our current predicament. Obama is not qualified but he is, sadly, the choice Democrats have been given by a party establishment too cowardly to face up to the extremists driving the primary results to Obama's favor. Instead of standing up and doing the right thing our so called party leaders endorsed the least qualified candidate I have ever seen run for president.

Our country is in big trouble.

[Ugh]

We paint schools in Cuba too:

A secret government report indicates that Omar Khadr, a Canadian who has been held at the Guantánamo Bay detention camp in Cuba since he was 16, has been abused by interrogators, his American military lawyer said Thursday.
...
in a bid to make him “more amenable and willing to talk,” he was moved to a new cell every three hours for three weeks, “thus denying him uninterrupted sleep.”

The report suggests that this practice, referred as the “frequent flier program,” and the interrogations by an American official that followed it were not particularly effective at obtaining information.

Many of the documents describe Mr. Khadr as repeatedly being in tears or on the verge of crying during interrogations.

Freeeeeeedoooooooooom!

[Michael Cain]

One of the "surprising facts" is that food prices and gasoline are not included in calculating the rate of inflation. Whether this is good or bad is beyond my expertise. The GDP is adjusted for inflation...

You need to be very careful about what you mean by "inflation". Food and gasoline are indeed included in the consumer price index measure of inflation, which determines Social Security increases and similar. Food and gasoline are included in the GDP deflator, used in GDP calculations. Food and gasoline are not used in the core inflation number used by the Fed in estimating inflation trends for setting monetary policy. Core inflation has been, from a statistical perspective, a better predictor of what inflation will be next quarter or next year than either CPI or GDPD.

[Gary Farber]

"Our country is in big trouble."

Ken, I started by quoting your comment, and then I slashed out all the unsupported opinion in your comment, but, oops, there was no content left when I finished.

You must have forgotten to include those paragraphs.

I look forward to seeing some content, and debateable facts, from you in your next comment!

I have a lot of opinions about candidates, too, but to save you time, I'll put them below, and then slash all the unsupported stuff out, and then cut it out entirely:

-----------------------
Okay, done. Hope you enjoyed the time I saved you!

I liked the part about "my fellow liberals," though.

[hilzoy]

Jamie Galbraith has just posted a review he did in 1995 of Phil and Wendy Gram's PhD dissertations in econ. Conclusion:

"On the whole, Phil Gramm’s thesis could have been condensed to an interesting article at some point in the development of twentieth century microeconomic theory. My guess is that the proper moment for that article would have come in the late 1940s, or some twenty years before Gramm actually wrote his dissertation. By the time he did write it, the mathematical character of the field had long since outpaced the very modest display of technique here, and the concerns Gramm writes about would probably have already been considered antique in most quarters. It would be interesting to know if Gramm got anything published out of this, and if so, where.

Wendy Gramm’s dissertation, done three years later at Northwestern, is a striking contrast. It is a display of mastery over a wide range of techniques, ranging from the development of theoretical model to the collection of data and application of econometric technique. Wendy’s writing in contrast to Phil’s is clear, well-organized and purposive. Her math is certainly competent for the time. You don’t have to have a deep immersion in her field to know what she’s getting at. (...)

On the whole, it is obvious that Wendy was trained to be a working professional economist — which she became. It is equally clear to me that Phil got his degree in order to move on and do something else. Had he stayed in economics, he probably would not have prospered."